The Lender’s Equations: How Much Mortgage will you Qualify for?

GDS and TDS debt service ratios.

Knowing how much you can reasonably, comfortably and responsibly contribute to home ownership is paramount in your making a wise and sound investment on your Canadian property. The big four factors that generally contribute to this mortgage amount are:

  1. Monthly income generated
  2. The amount you can contribute to your down payment
  3. The mortgage interest rates and term you qualify for
  4. Other financial commitments or debts you are obliged to pay

Lenders basically use two rules to determine the mortgage you are eligible to be funded to receive, in addition to examining your credit history and FICO score:

  1. Gross Debt Service Ratio (GDS)
  2. Total Debt Service Ratio (TDS)

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Protecting Yourself From Identity Theft is Common Sense

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Protecting Your Identity

Your DNA solely codes you. Your fingerprints will never match someone else’s. There is no reason why your identity should be any different.

The vast majority of people rarely think about the possible ramifications for using their identity improperly, or how devastating an identity theft can be to their personal lives. We come across emails every day wherein people include all of their personal information.

Our online mortgage application is secure, firewalled and password protected, but email is not. Email transmissions are not protected from hackers, phishers, thieves, and con artists.

Take these measures to keep your identity protected:

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Building the Right Team at Mortgage Time

Choose professionals for your mortgage. The Mortgage Group.

Your mortgage is one of the largest purchase items you will probably take on in your life. In making that commitment, you will most likely seek advice from several people: your family, your partner, your real estate agent, your financial planner and your mortgage broker.

Ensuring that you employ the best real estate professionals that you have access to – home buying professionals with your best interest in mind – will save you exponentially down the line. It takes a solid team to secure an optimal home.

Finding a well-connected Canadian mortgage broker is your first step. A mortgage broker will help you ascertain the true amount you can afford to spend on your new home, before you start shopping. A mortgage pre-approval will give you powerful buying power with home sellers, and will hold for you the best mortgage rates available, usually within 90 days. With one mortgage application, a mortgage broker will scout the Canadian mortgage market for you, and find the mortgage product that best suits your needs, be it through a bank, trust company, credit union, insurance company or private lender.

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Saving for a Down Payment

down payment minimum

Mortgage Down Payment

Today’s mortgage market allows potential homeowners to purchase their dream property in Canada with as little as five per cent down.

Any down payment that totals less than 20 per cent of the property value will require mortgage default insurance, and is considered to be a high ratio loan.

A conventional mortgage is defined as a mortgage loan where 80 per cent or less of the property value is financed through a lender. The percentage of your home value that is financed, or not paid for by the down payment, is defined in a Loan to Value ratio (LTV) (loan amount divided by property value). The LTV has a large influence on the mortgage product you will be eligible to qualify for on the purchase of your new property.

The greater the down payment you can accumulate, the greater the contribution you are making toward the principal value of your home, and thus the less of the mortgage loan amount you will be paying interest on over time.
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Refinance and Consolidate Your Mortgage

Refinance / Consolidate
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The Dirty “R” Word

If the word “Recession” fills you with unease, you’re not alone. The word doesn’t sit well with many people. Unless you are in the rare circumstance of having just come into a gratuitous fortune, or you are employed in a sector of the economy that has somehow been unaffected by it, a recession will to affect you. Even then, depending on the severity of the recession, unaffected sectors can be effected by proxy.

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Refinancing is good for more than just mortgage rates

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Ultra-low mortgage rates aren't just benefiting homebuyers. Current homeowners looking to save money on their monthly mortgage payments are taking advantage of low interest rates by refinancing. However, saving on mortgage rates isn't the only reason to consider refinancing. The act of refinancing provides mortgage holders with a number of options, and it's a good idea for all homeowners to explore these. Even if taking out a brand new mortgage to replace a current one doesn't make sense based on interest rates alone, the other opportunities refinancing provides should not be ignored. Continue reading

Ways to invest in real estate

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While investing is often associated with stocks and bonds, the Canadian real estate market provides potential investors with plenty of lucrative opportunities. When mortgage rates are low and properties are available, savvy buyers can make a tidy profit in the housing market. However, before an individual decides to invest, they must understand the different ways to invest in real estate, as well as the advantages and disadvantages of each.

Buying, selling and renting
Buying real estate directly is the most common way to invest. Buyers typically purchase a residential property at a low price, renovate it or wait until the market improves, and sell the property at a profit. Buying homes also presents Canadians with the chance to become landlords. Purchasing a property and renting it out to tenants can be a great way to bring in extra income on a steady basis. Continue reading

Canadians more optimistic regarding household debt

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A report from PricewaterhouseCoopers spotlights new trends in Canadian views on debt, as well as the impact of mortgage restrictions on the real estate market.

Data from The Tide Turns: Canadians, Debt and Retail Lending study shows that more Canadians are comfortable with the amount of debt they're carrying, and they're also more focused on reducing it. Of 1,228 Canadians surveyed, 57 percent felt their debt level was about right. This marks a decrease from 59 percent during the previous year.

Meanwhile, 66 percent of respondents indicated that they plan on reducing their debt this year. This represents a 3 percent increase from last year.

Additionally, Canadians remain optimistic regarding the economy and their own financial situations. More than half (55 percent) of respondents said they think the nation's economy will remain stable or grow. Nearly half (46 percent) believe their income will rise over the next five years. Continue reading

Determining home affordability

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Affordability is a hot topic in Canada's residential real estate market. While rising home prices mean greater value for homeowners, they can also translate to difficulties for prospective homebuyers. After all, a more expensive home will require more financing, something that can lead to more debt and ultimately foreclosure if a borrower is unable to stay current on their loan.

Data from the Teranet-National Bank's house price index shows that despite a decline in sales, home prices have continued to rise throughout the country. Overall, on a year-over-year basis, home prices increased 2 percent during May. This follows a 2 percent gain during April. Continue reading

Cash back mortgages

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Cash back mortgages allow borrowers to receive money back after the closing of a home loan. These types of mortgages are perfect for borrowers who could use extra cash during the mortgage process. Contact Canadian Equity to take advantage of a cash back mortgage.

What is a cash back mortgage?
A cash back mortgage is a type of home loan that gives borrowers money back after the loan has been closed. It is possible to obtain a cash back mortgage on either a purchase loan or a refinance. The money you receive from a cash back loan can be in the form of a lump sum or instalments. There is no rule for what the money must be used for, but many borrowers use cash back mortgages to help pay for any fees that may arise during the home loan process, as well as for the costs of moving into and renovating a new home. Continue reading